The New York Department of Taxation and Finance recently issued an Advisory Opinion explaining that a fleet maintenance program that acts as a "liaison" between its customers and third party service providers is not a taxable service. N.Y. Advisory Op. of the Commr. of Taxn. & Fin. TSB-A-12(19)S (Aug. 27, 2012). The taxpayer that requested the opinion uses the expertise it has acquired in its own business (a sizeable fleet vehicle leasing business) to offer four management services to customers who own or operate their own fleet.

The first program is a service savings program where the taxpayer negotiates agreements with unrelated third party providers so that all of its customers receive discounts on service products like tires, batteries, and glass replacement. The second program is a preventative maintenance program where the taxpayer negotiates contracts with maintenance companies for discounted fixed prices for things like oil changes. The third program is a warranty recovery program where the taxpayer acts as a liaison between its customers and vehicle manufacturers and repair shops to determine if a repair is needed and if so whether or not it is covered under warranty. The final program is a 24 hour roadside assistance program where the taxpayer provides a 24 hour service to arrange for towing.

The contract the taxpayer uses characterizes the service as an administrative billing and processing service. All third party service providers bill the taxpayer monthly for services they provide. The taxpayer then aggregates all third party bills and sends its customers a single monthly bill for all services rendered. If service from a third party service provider included taxable parts or services, the taxpayer would pay those taxes and then pass the cost through to the customer.

New York imposes sales tax imposes only on specifically listed services, and New York includes installing, maintaining, servicing, and repairing tangible personal property in its list of taxable services. N.Y. Tax Law sec. 1105(c)(3). This means that, generally, performing fleet maintenance is taxable. Nevertheless, based on the facts presented by the taxpayer, the Department agreed that the four services in the taxpayer's maintenance management program are not subject to tax. The Department reasoned that the taxpayer in this case does not actually own or operate any maintenance or repair facility. Instead, the service the taxpayer offers is a management and oversight service intended to reduce its customers' cost.

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